0000803649false00008036492023-05-032023-05-030000803649us-gaap:CommonClassAMember2023-05-032023-05-030000803649us-gaap:SeriesDPreferredStockMember2023-05-032023-05-03

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): May 3, 2023

EQUITY COMMONWEALTH
(Exact Name of Registrant as Specified in Its Charter)

Maryland
(State or Other Jurisdiction of Incorporation)
1-931704-6558834
(Commission File Number)(IRS Employer Identification No.)
Two North Riverside Plaza, Suite 2100, Chicago, IL

60606
(Address of Principal Executive Offices)(Zip Code)
(312) 646-2800
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title Of Each ClassTrading SymbolName of Each Exchange On Which Registered
Common Shares of Beneficial InterestEQCNew York Stock Exchange
6.50% Series D Cumulative Convertible Preferred Shares of Beneficial InterestEQCpDNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




Item 2.02. Results of Operations and Financial Condition.
On May 3, 2023, Equity Commonwealth, or the Company, issued a press release setting forth the Company’s results of operations and financial condition for the quarter ended March 31, 2023, and also provided certain supplemental operating and financial information for the quarter ended March 31, 2023.  Copies of the Company’s press release and supplemental operating and financial information are furnished as Exhibits 99.1 and 99.2 hereto, respectively.
Item 9.01.  Financial Statements and Exhibits.
(d)  Exhibits
99.1
99.2
104The cover page from this Current Report on form 8-K, formatted in Inline XBRL.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EQUITY COMMONWEALTH
By:/s/ William H. Griffiths
Name:William H. Griffiths
Title:Executive Vice President, Chief
Financial Officer and Treasurer
Date: May 3, 2023
Exhibit 99.1
image1.jpg
Two North Riverside Plaza, Suite 2100, Chicago, Illinois 60606

Equity Commonwealth Reports First Quarter 2023 Results
Chicago – May 3, 2023 - Equity Commonwealth (NYSE: EQC) today reported financial results for the quarter ended March 31, 2023.

Financial results for the quarter ended March 31, 2023
Net income attributable to common shareholders was $20.7 million, or $0.19 per diluted share, for the quarter ended March 31, 2023. This compares to net loss attributable to common shareholders of $0.7 million, or $0.01 per diluted share, for the quarter ended March 31, 2022. The increase in net income was primarily due to an increase in interest income from higher average interest rates.

Funds from Operations, or FFO, as defined by the National Association of Real Estate Investment Trusts, for the quarter ended March 31, 2023, were $25.1 million, or $0.22 per diluted share. This compares to FFO for the quarter ended March 31, 2022 of $3.7 million, or $0.03 per diluted share. The following items impacted FFO for the quarter ended March 31, 2023, compared to the corresponding 2022 period:
•$0.24 per diluted share increase in interest and other income, net;
•$(0.02) per diluted share decrease in same property NOI;
•$(0.02) per diluted share decrease in NOI from properties sold; and
•$(0.01) per diluted share increase in income tax expense.

Normalized FFO was $25.3 million, or $0.23 per diluted share, for the quarter ended March 31, 2023. This compares to Normalized FFO for the quarter ended March 31, 2022 of $3.7 million, or $0.03 per diluted share. The following items impacted Normalized FFO for the quarter ended March 31, 2023, compared to the corresponding 2022 period:
•$0.24 per diluted share increase in interest and other income, net;
•$(0.02) per diluted share decrease in same property NOI;
•$(0.02) per diluted share decrease in NOI from properties sold; and
•$(0.01) per diluted share increase in income tax expense.

Normalized FFO begins with FFO and eliminates certain items that, by their nature, are not comparable from period to period, non-cash items, and items that obscure the company’s operating performance. Definitions of FFO, Normalized FFO and reconciliations to net income, determined in accordance with U.S. generally accepted accounting principles, or GAAP, are included at the end of this press release.

As of March 31, 2023, the company’s cash and cash equivalents balance was $2.1 billion.

Same property results for the quarter ended March 31, 2023
The company’s same property portfolio at the end of the quarter consisted of 4 properties totaling 1.5 million square feet. Operating results were as follows:
•The same property portfolio was 81.6% leased as of March 31, 2023, compared to 82.8% as of December 31, 2022, and 83.3% as of March 31, 2022.
•The same property portfolio commenced occupancy was 77.0% as of March 31, 2023, compared to 78.7% as of December 31, 2022, and 79.5% as of March 31, 2022.
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•Same property NOI decreased 20.5% when compared to the same period in 2022, primarily due to the collection of $1.9 million of a previously reserved receivable in the quarter ended March 31, 2022.
•Same property cash NOI decreased 17.0% when compared to the same period in 2022, primarily due to the collection of the previously reserved receivable described above.
•Excluding the collection of the previously reserved receivable, same property NOI and same property cash NOI decreased 2.7% and increased 2.3%, respectively, when compared to the same period in 2022.
•The company entered into leases for approximately 60,000 square feet, including a renewal leases for approximately 37,000 square feet and new leases for approximately 23,000 square feet.
•The GAAP rental rate on new and renewal leases was 13.8% higher compared to the prior GAAP rental rate for the same space.
•The cash rental rate on new and renewal leases was 3.6% higher compared to the prior cash rental rate for the same space.

The definitions and reconciliations of same property NOI and same property cash NOI to net income, determined in accordance with GAAP, are included at the end of this press release. The same property portfolio at the end of the quarter included properties continuously owned from January 1, 2022 through March 31, 2023.

Significant events during the quarter ended March 31, 2023
On February 13, 2023, the company declared a special, one-time cash distribution of $4.25 per common share, which was paid on March 9, 2023 to shareholders of record on February 23, 2023.

Earnings Conference Call & Supplemental Operating and Financial Information
Equity Commonwealth will host a conference call to discuss first quarter results on Thursday, May 4, 2023, at 9:00 A.M. CT. The conference call will be available via live audio webcast on the Investor Relations section of the company’s website (www.eqcre.com). A replay of the audio webcast will also be available following the call.

A copy of EQC’s First Quarter 2023 Supplemental Operating and Financial Information is available in the Investor Relations section of EQC’s website at www.eqcre.com.

About Equity Commonwealth
Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC’s portfolio is comprised of four properties totaling 1.5 million square feet.

Regulation FD Disclosures
We use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

Forward-Looking Statements
Some of the statements contained in this press release constitute forward-looking statements within the meaning of the federal securities laws. Any forward-looking statements contained in this press release are intended to be made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. You can identify forward-looking statements by the use of forward-looking terminology, including but not limited to, “may,” “will,” “should,” “could,” “would,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not
2

guarantee that the transactions and events described will happen as described (or that they will happen at all). We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q.


Contact:
Bill Griffiths
(312) 646-2801
ir@eqcre.com













3
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands, except share data)

March 31, 2023December 31, 2022
ASSETS
Real estate properties:
Land$44,060 $44,060 
Buildings and improvements364,155 364,063 
408,215 408,123 
Accumulated depreciation(171,379)(169,530)
236,836 238,593 
Cash and cash equivalents2,128,688 2,582,222 
Rents receivable15,606 16,009 
Other assets, net18,194 18,061 
Total assets$2,399,324 $2,854,885 
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other$19,642 $25,935 
Rent collected in advance2,815 2,355 
Distributions payable7,795 2,863 
Total liabilities$30,252 $31,153 
Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;
Series D preferred shares; 6.50% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880$119,263 $119,263 
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 109,701,592 and 109,428,252 shares issued and outstanding, respectively1,097 1,094 
Additional paid in capital3,976,643 3,979,566 
Cumulative net income3,858,500 3,835,815 
Cumulative common distributions(4,866,401)(4,393,522)
Cumulative preferred distributions(727,685)(725,688)
Total shareholders’ equity2,361,417 2,816,528 
Noncontrolling interest7,655 7,204 
Total equity$2,369,072 $2,823,732 
Total liabilities and equity$2,399,324 $2,854,885 

4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, amounts in thousands, except per share data)


Three Months Ended
March 31,
20232022
Revenues:
Rental revenue$14,226 $15,840 
Other revenue (1)
1,350 846 
Total revenues$15,576 $16,686 
Expenses:
Operating expenses$7,256 $4,533 
Depreciation and amortization4,310 4,412 
General and administrative8,555 8,002 
Total expenses$20,121 $16,947 
Interest and other income, net28,376 1,574 
Income before income taxes23,831 1,313 
Income tax expense(1,080)(8)
Net income$22,751 $1,305 
Net income attributable to noncontrolling interest(66)(3)
Net income attributable to Equity Commonwealth$22,685 $1,302 
Preferred distributions(1,997)(1,997)
Net income (loss) attributable to Equity Commonwealth common shareholders$20,688 $(695)
Weighted average common shares outstanding — basic (2)
109,720 113,740 
Weighted average common shares outstanding — diluted (2)(3)
111,300 113,740 
Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic$0.19 $(0.01)
Diluted$0.19 $(0.01)
(1)Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
(2)Weighted average common shares outstanding for the three months ended March 31, 2023 and 2022 includes 113 and 162 unvested, earned RSUs, respectively.
(3)
As of March 31, 2023, we had 4,915 series D preferred shares outstanding. The series D preferred shares were convertible into 4,032 common shares as of March 31, 2023 and 3,237 common shares as of March 31, 2022. The series D preferred shares are anti-dilutive for GAAP EPS for the three months ended March 31, 2023 and 2022.

5
CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO
(Unaudited, amounts in thousands, except per share data)

Three Months Ended
March 31,
20232022
Calculation of FFO
Net income$22,751 $1,305 
Real estate depreciation and amortization4,299 4,373 
FFO attributable to Equity Commonwealth27,050 5,678 
Preferred distributions(1,997)(1,997)
FFO attributable to EQC common shareholders and unitholders$25,053 $3,681 
Calculation of Normalized FFO
FFO attributable to EQC common shareholders and unitholders$25,053 $3,681 
Straight-line rent adjustments279 10 
Normalized FFO attributable to EQC common shareholders and unitholders
$25,332 $3,691 
Weighted average common shares and units outstanding — basic (1)
110,044 114,008 
Weighted average common shares and units outstanding — diluted (1)
111,624 114,468 
FFO attributable to EQC common shareholders and unitholders per share and unit — basic
$0.23 $0.03 
FFO attributable to EQC common shareholders and unitholders per share and unit — diluted
$0.22 $0.03 
Normalized FFO attributable to EQC common shareholders and unitholders per share and unit — basic
$0.23 $0.03 
Normalized FFO attributable to EQC common shareholders and unitholders per share and unit — diluted
$0.23 $0.03 
(1)
Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic for the three months ended March 31, 2023 and 2022 include 324 and 268 LTIP/Operating Partnership Units, respectively, that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only).




6

We compute FFO in accordance with standards established by Nareit. Nareit defines FFO as net income (loss), calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate and our portion of these items related to equity investees and noncontrolling interests.  Our calculation of Normalized FFO differs from Nareit’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period.  FFO and Normalized FFO are supplemental non-GAAP financial measures. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities.
We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs.  FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income (loss), net income (loss) attributable to EQC common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  These measures should be considered in conjunction with net income (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.



7
CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI
(Unaudited, amounts in thousands)

For the Three Months Ended
3/31/202312/31/20229/30/20226/30/20223/31/2022
Calculation of Same Property NOI and Same Property Cash Basis NOI:
Rental revenue$14,226 $14,628 $13,869 $14,426 $15,840 
Other revenue (1)
1,350 1,159 1,257 1,115 846 
Operating expenses(7,256)(6,986)(6,073)(6,592)(4,533)
NOI$8,320 $8,801 $9,053 $8,949 $12,153 
Straight-line rent adjustments279 389 (61)(100)10 
Lease termination fees(177)(743)(259)(177)(325)
Cash Basis NOI$8,422 $8,447 $8,733 $8,672 $11,838 
Cash Basis NOI from non-same properties (2)
(4)14 48 27 (1,699)
Same Property Cash Basis NOI$8,418 $8,461 $8,781 $8,699 $10,139 
Non-cash rental income and lease termination fees from same properties(102)354 320 277 315 
Same Property NOI$8,316 $8,815 $9,101 $8,976 $10,454 
Reconciliation of Same Property NOI to GAAP Net Income:
Same Property NOI$8,316 $8,815 $9,101 $8,976 $10,454 
Non-cash rental income and lease termination fees from same properties102 (354)(320)(277)(315)
Same Property Cash Basis NOI$8,418 $8,461 $8,781 $8,699 $10,139 
Cash Basis NOI from non-same properties (2)
4 (14)(48)(27)1,699 
Cash Basis NOI$8,422 $8,447 $8,733 $8,672 $11,838 
Straight-line rent adjustments(279)(389)61 100 (10)
Lease termination fees177 743 259 177 325 
NOI$8,320 $8,801 $9,053 $8,949 $12,153 
Depreciation and amortization(4,310)(4,634)(4,451)(4,313)(4,412)
General and administrative(8,555)(7,137)(7,593)(7,646)(8,002)
Interest and other income, net28,376 24,263 15,145 5,963 1,574 
Gain on sale of properties, net— 7 90 — — 
Income before income taxes$23,831 $21,300 $12,244 $2,953 $1,313 
Income tax expense(1,080)(372)(23)(50)(8)
Net income$22,751 $20,928 $12,221 $2,903 $1,305 
(1)Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
(2)Cash Basis NOI from non-same properties for all periods presented includes the operations of disposed properties.


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NOI is income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses. Cash Basis NOI is NOI excluding the effects of straight-line rent adjustments, lease value amortization and lease termination fees. The quarter-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2022 through March 31, 2023. The year-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2022 through March 31, 2023.Properties classified as held for sale within our condensed consolidated balance sheets are excluded from the same property versions of these measures.
We consider these supplemental non-GAAP financial measures to be appropriate supplemental measures to net income (loss) because they may help to understand the operations of our properties. We use these measures internally to evaluate property level performance, and we believe that they provide useful information to investors regarding our results of operations because they reflect only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. Cash Basis NOI is among the factors considered with respect to acquisition, disposition and financing decisions. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income (loss), net income (loss) attributable to Equity Commonwealth common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate these measures differently than we do.

9
Exhibit 99.2



eqcsitebannerfebruary2020.jpg

Equity Commonwealth
Supplemental Operating
and Financial Information

First Quarter 2023

image2.jpg



Corporate HeadquartersInvestor Relations
Two North Riverside Plaza(312) 646-2801
Suite 2100ir@eqcre.com
Chicago, IL 60606www.eqcre.com
(312) 646-2800



TABLE OF CONTENTS
Corporate Information
Company Profile and Investor Information
Financial Information
Key Financial Data
Condensed Consolidated Balance Sheets
Additional Balance Sheet Information
Condensed Consolidated Statements of Operations
Calculation of Same Property Net Operating Income (NOI) and Same Property Cash Basis NOI
Same Property Results of Operations
Calculation of EBITDA, EBITDAre, and Adjusted EBITDAre
Calculation of Funds from Operations (FFO) and Normalized FFO
Portfolio Information
Property Detail
Leasing Summary
Capital Summary - Expenditures & Same Property Leasing Commitments
Tenants Representing 2.5% or More of Annualized Rental Revenue
Same Property Lease Expiration Schedule
Additional Support
Common & Potential Common Shares
Definitions
Forward-Looking Statements
Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws including, but not limited to, statements pertaining to our capital resources, portfolio performance, lease expirations schedules, results of operations or anticipated market conditions, including statements regarding the overall impact of COVID-19 and other external factors on the foregoing. Any forward-looking statements contained in this presentation are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. You can identify forward-looking statements by the use of forward-looking terminology, including but not limited to, “may,” “will,” “should,” “could,” “would,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Any forward-looking statements contained in this presentation reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q.
Regulation FD Disclosures
We use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

2

COMPANY PROFILE AND INVESTOR INFORMATION
Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States.
Same Property Statistics
No. of
 PropertiesSq. Feet% Leased% Commenced
41,507,37981.6%77.0%
 NYSE Trading Symbols
 Common Stock: EQC
 Preferred Stock Series D: EQCpD
Board of Trustees
Sam Zell (Chairman)David A. HelfandGerald A. Spector
Ellen-Blair ChubePeter Linneman (Lead Independent Trustee)James A. Star
Martin L. EdelmanMary Jane Robertson
Senior Management
David A. HelfandDavid S. Weinberg
President and Chief Executive OfficerExecutive Vice President and
Chief Operating Officer
William H. GriffithsOrrin S. Shifrin
Executive Vice President,Executive Vice President,
Chief Financial Officer and TreasurerGeneral Counsel and Secretary
Equity Research Coverage (1)
Bank of America / Merrill LynchCamille Bonnel(646) 855-5042camille.bonnel@bofa.com
CitigroupNicholas Joseph(212) 816-1909nicholas.joseph@citi.com
Green Street AdvisorsDaniel Ismail(949) 640-8780dismail@greenstreetadvisors.com




Certain terms are defined in the definitions section of this document. All financial data included herein is unaudited.
(1)Any opinions, estimates or forecasts regarding EQC's performance made by these analysts do not represent opinions, forecasts or predictions of EQC or its management. EQC does not by its reference to the analysts above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts.

3

KEY FINANCIAL DATA
(Unaudited, amounts in thousands, except per share data)
As of and for the Three Months Ended
3/31/202312/31/20229/30/20226/30/20223/31/2022
OPERATING INFORMATION
Ending property count
4 4 4 4 4 
Ending square footage
1,507 1,507 1,507 1,507 1,507 
Percent leased
81.6 %82.8 %83.4 %84.8 %83.3 %
Percent commenced
77.0 %78.7 %80.8 %82.9 %79.5 %
Net income (loss) attributable to EQC common shareholders
$20,688 $18,878 $10,193 $899 $(695)
Adjusted EBITDAre (1)
28,141 25,927 16,605 7,266 5,725 
SAME PROPERTY OPERATING INFORMATION
Ending square footage1,507 1,507 1,507 1,507 1,507 
Percent leased81.6 %82.8 %83.4 %84.8 %83.3 %
Percent commenced77.0 %78.7 %80.8 %82.9 %79.5 %
Same Property NOI (1)
$8,316 $8,815 $9,101 $8,976 $10,454 
Same Property Cash Basis NOI (1)
8,418 8,461 8,781 8,699 10,139 
Same Property NOI margin53.4 %55.8 %60.2 %57.8 %62.1 %
Same Property Cash Basis NOI margin53.7 %54.8 %59.3 %57.0 %61.4 %
SHARES OUTSTANDING AND PER SHARE DATA(2)
Shares Outstanding at End of Period
Common shares outstanding
109,702 109,428 110,652 111,242 112,670 
Dilutive restricted share units (RSUs), Operating Partnership Units, and LTIP Units (2)
2,068 1,842 1,657 1,741 822 
Preferred shares outstanding (3)
4,915 4,915 4,915 4,915 4,915 
Weighted Average Shares Outstanding - GAAP
Basic (4)
109,720 109,695 111,305 112,005 113,740 
Diluted (4)
111,300 111,171 112,596 113,380 113,740 
Distributions Declared Per Common Share$4.25 $— $1.00 $— $— 
BALANCE SHEET
Total assets$2,399,324 $2,854,885 $2,968,520 $2,968,480 $3,000,018 
Total liabilities30,252 31,153 137,925 22,658 19,751 
MARKET CAPITALIZATION
Market value of preferred shares
$122,831 $123,126 $128,631 $128,090 $135,414 
Market value of diluted common shares
2,314,757 2,778,412 2,735,847 3,110,422 3,201,609 
Total market capitalization$2,437,588 $2,901,538 $2,864,478 $3,238,512 $3,337,023 
(1)Non-GAAP financial measures are defined and reconciled to the most directly comparable GAAP measure herein.
(2)Restricted share units (RSUs) and LTIP Units are equity awards that contain both service and market-based vesting components. Refer to the schedule of Common & Potential Common Shares for information regarding RSUs and LTIP Units and their impact on weighted average shares outstanding.
(3)
As of March 31, 2023, we had 4,915 series D preferred shares outstanding that were convertible into 4,032 common shares. The series D preferred shares are anti-dilutive for GAAP EPS for all periods presented. Refer to the schedule of Common & Potential Common Shares for information regarding the series D preferred shares and their impact on diluted weighted average shares outstanding for EPS, FFO per share and Normalized FFO per share.
(4)Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

4

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands, except share data)
March 31, 2023December 31, 2022
ASSETS
Real estate properties:
Land$44,060 $44,060 
Buildings and improvements364,155 364,063 
408,215 408,123 
Accumulated depreciation(171,379)(169,530)
236,836 238,593 
Cash and cash equivalents2,128,688 2,582,222 
Rents receivable15,606 16,009 
Other assets, net18,194 18,061 
Total assets$2,399,324 $2,854,885 
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other$19,642 $25,935 
Rent collected in advance2,815 2,355 
Distributions payable7,795 2,863 
Total liabilities$30,252 $31,153 
Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;
Series D preferred shares; 6.50% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880$119,263 $119,263 
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 109,701,592 and 109,428,252 shares issued and outstanding, respectively1,097 1,094 
Additional paid in capital3,976,643 3,979,566 
Cumulative net income3,858,500 3,835,815 
Cumulative common distributions(4,866,401)(4,393,522)
Cumulative preferred distributions(727,685)(725,688)
Total shareholders’ equity2,361,417 2,816,528 
Noncontrolling interest7,655 7,204 
Total equity$2,369,072 $2,823,732 
Total liabilities and equity$2,399,324 $2,854,885 

5

ADDITIONAL BALANCE SHEET INFORMATION
(Unaudited, amounts in thousands)
March 31, 2023December 31, 2022
Additional Balance Sheet Information
Straight-line rents receivable$14,622 $14,901 
Accounts receivable984 1,108 
Rents receivable$15,606 $16,009 
Capitalized lease incentives, net$1,383 $1,479 
Deferred leasing costs, net11,285 10,714 
Other5,526 5,868 
Other assets, net$18,194 $18,061 
Accounts payable$3,384 $2,884 
Accrued taxes7,148 10,948 
Accrued capital expenditures1,710 934 
Accrued leasing costs339 389 
Security deposits2,552 2,652 
Other accrued liabilities4,509 8,128 
Accounts payable, accrued expenses and other$19,642 $25,935 

6

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, amounts in thousands, except per share data)
Three Months Ended
March 31,
20232022
Revenues:
Rental revenue$14,226 $15,840 
Other revenue (1)
1,350 846 
Total revenues$15,576 $16,686 
Expenses:
Operating expenses$7,256 $4,533 
Depreciation and amortization4,310 4,412 
General and administrative8,555 8,002 
Total expenses$20,121 $16,947 
Interest and other income, net28,376 1,574 
Income before income taxes23,831 1,313 
Income tax expense(1,080)(8)
Net income$22,751 $1,305 
Net income attributable to noncontrolling interest(66)(3)
Net income attributable to Equity Commonwealth$22,685 $1,302 
Preferred distributions
(1,997)(1,997)
Net income (loss) attributable to Equity Commonwealth common shareholders$20,688 $(695)
Weighted average common shares outstanding — basic (2)
109,720 113,740 
Weighted average common shares outstanding — diluted (2)
111,300 113,740 
 Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic$0.19 $(0.01)
Diluted$0.19 $(0.01)
(1)Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
(2)Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

7

CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI
(Unaudited, amounts in thousands)
For the Three Months Ended
3/31/202312/31/20229/30/20226/30/20223/31/2022
Calculation of Same Property NOI and Same Property Cash Basis NOI:
Rental revenue$14,226 $14,628 $13,869 $14,426 $15,840 
Other revenue (1)
1,350 1,159 1,257 1,115 846 
Operating expenses(7,256)(6,986)(6,073)(6,592)(4,533)
NOI$8,320 $8,801 $9,053 $8,949 $12,153 
Straight-line rent adjustments279 389 (61)(100)10 
Lease termination fees(177)(743)(259)(177)(325)
Cash Basis NOI$8,422 $8,447 $8,733 $8,672 $11,838 
Cash Basis NOI from non-same properties (2)
(4)14 48 27 (1,699)
Same Property Cash Basis NOI$8,418 $8,461 $8,781 $8,699 $10,139 
Non-cash rental income and lease termination fees from same properties
(102)354 320 277 315 
Same Property NOI$8,316 $8,815 $9,101 $8,976 $10,454 
Reconciliation of Same Property NOI to GAAP Net Income:
Same Property NOI$8,316 $8,815 $9,101 $8,976 $10,454 
Non-cash rental income and lease termination fees from same properties
102 (354)(320)(277)(315)
Same Property Cash Basis NOI$8,418 $8,461 $8,781 $8,699 $10,139 
Cash Basis NOI from non-same properties (2)
4 (14)(48)(27)1,699 
Cash Basis NOI$8,422 $8,447 $8,733 $8,672 $11,838 
Straight-line rent adjustments(279)(389)61 100 (10)
Lease termination fees177 743 259 177 325 
NOI$8,320 $8,801 $9,053 $8,949 $12,153 
Depreciation and amortization(4,310)(4,634)(4,451)(4,313)(4,412)
General and administrative(8,555)(7,137)(7,593)(7,646)(8,002)
Interest and other income, net28,376 24,263 15,145 5,963 1,574 
Gain on sale of properties, net— 7 90 — — 
Income before income taxes$23,831 $21,300 $12,244 $2,953 $1,313 
Income tax expense(1,080)(372)(23)(50)(8)
Net income$22,751 $20,928 $12,221 $2,903 $1,305 
(1)Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
(2)Cash Basis NOI from non-same properties for all periods presented includes the operations of disposed properties.

8

SAME PROPERTY RESULTS OF OPERATIONS
(Unaudited, dollars and square feet in thousands)
As of and for the Three Months Ended March 31,
20232022% Change
Properties4 4 
Square Feet
1,507 1,507 
% Leased81.6 %83.3 %(1.7)%
% Commenced77.0 %79.5 %(2.5)%
Rental revenue
$14,328 $15,674 (8.6)%
Other revenue (1)
1,343 836 60.6 %
Straight-line rent adjustment
(279)(10)
Lease termination fees
177 325 
Total revenue
15,569 16,825 (7.5)%
Operating expenses
(7,253)(6,371)13.8 %
NOI
$8,316 $10,454 (20.5)%
NOI Margin
53.4 %62.1 %
Straight-line rent adjustment
$279 $10 
Lease termination fees
(177)(325)
Cash Basis NOI$8,418 $10,139 (17.0)%
Cash Basis NOI Margin
53.7 %61.4 %
(1)Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.

9

CALCULATION OF EBITDA, EBITDAre, AND ADJUSTED EBITDAre
(Unaudited, amounts in thousands)
Three Months Ended
March 31,
20232022
Net income$22,751 $1,305 
Income tax expense
1,080 8 
Depreciation and amortization
4,310 4,412 
EBITDA, EBITDAre and Adjusted EBITDAre
$28,141 $5,725 

10

CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO
(Unaudited, amounts in thousands, except per share data)
Three Months Ended
March 31,
20232022
Calculation of FFO
Net income$22,751 $1,305 
Real estate depreciation and amortization4,299 4,373 
FFO attributable to Equity Commonwealth27,050 5,678 
Preferred distributions(1,997)(1,997)
FFO attributable to EQC common shareholders and unitholders
$25,053 $3,681 
Calculation of Normalized FFO
FFO attributable to EQC common shareholders and unitholders$25,053 $3,681 
Straight-line rent adjustments279 10 
Normalized FFO attributable to EQC common shareholders and unitholders
$25,332 $3,691 
Weighted average common shares and units outstanding -- basic (1)
110,044 114,008 
Weighted average common shares and units outstanding -- diluted (1)
111,624 114,468 
FFO attributable to EQC common shareholders and unitholders per share and unit -- basic
$0.23 $0.03 
FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted
$0.22 $0.03 
Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- basic
$0.23 $0.03 
Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted
$0.23 $0.03 
(1)
Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic for the three months ended March 31, 2023 and 2022 include 324 and 268 LTIP/Operating Partnership Units, respectively, that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only). Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares and units outstanding.

11

PROPERTY DETAIL
As of March 31, 2023
(Unaudited, sorted by annualized rental revenue, dollars in thousands)

Same Property Portfolio(1)
PropertyCity, StateTypeNo. of BuildingsSquare Feet% Leased% CommencedAnnualized Rental RevenueUndepreciated Book ValueNet Book ValueYear Acquired
11225 Seventeenth StreetDenver, COOffice1 695,37293.5 %88.8 %$28,928 $175,607 $114,687 2009
(17th Street Plaza)
2Bridgepoint SquareAustin, TXOffice5 440,00772.0 %66.3 %12,116 104,674 46,788 1997
31250 H Street, NWWashington, D.C.Office1 196,49065.1 %65.1 %7,765 75,415 35,561 1998
4206 East 9th StreetAustin, TXOffice1 175,51077.0 %70.6 %7,633 52,519 39,800 2012
(Capitol Tower)
Total Same Properties8 1,507,37981.6 %77.0 %$56,442 $408,215 $236,836 
(1)Refer to the definitions section of this document for a description of our same property portfolio.


12

LEASING SUMMARY
(Unaudited, dollars and square feet in thousands, except per square foot data)
As of and for the Three Months Ended
3/31/202312/31/20229/30/20226/30/20223/31/2022
Properties
4 4 4 4 4 
Total square feet
1,507 1,507 1,507 1,507 1,507 
Percentage leased81.6 %82.8 %83.4 %84.8 %83.3 %
Percentage commenced77.0 %78.7 %80.8 %82.9 %79.5 %
Total Leases
Square feet60 76 55 34 40 
Lease term (years)5.8 6.1 4.4 6.0 5.2 
Starting cash rent$61.15 $47.43 $46.88 $42.28 $52.73 
Percent change in cash rent (1)
3.6 %0.4 %(3.3)%4.9 %2.8 %
Percent change in GAAP rent (1)
13.8 %3.6 %2.2 %9.6 %5.0 %
Total TI & LC per square foot (2)
$64.87 $54.55 $29.49 $66.31 $35.71 
Total TI & LC per sq. ft. per year of lease term (2)
$11.22 $8.91 $6.73 $10.98 $6.85 
Renewal Leases
Square feet37 30 30 6 30 
Lease term (years)5.3 3.2 3.5 1.3 4.9 
Starting cash rent$63.26 $45.11 $49.67 $41.14 $56.84 
Percent change in cash rent (1)
4.8 %(2.9)%(3.3)%4.9 %2.8 %
Percent change in GAAP rent (1)
16.8 %(1.6)%2.2 %9.6 %5.0 %
Total TI & LC per square foot (2)
$58.65 $7.56 $18.53 $2.22 $40.05 
Total TI & LC per sq. ft. per year of lease term (2)
$11.00 $2.39 $5.34 $1.73 $8.11 
New Leases
Square feet23 46 25 28 10 
Lease term (years)6.5 8.1 5.5 7.0 6.0 
Starting cash rent (3)
$57.87 $48.96 $43.45 $42.51 $40.84 
Percent change in cash rent (1)
1.5 %3.4 %— — — 
Percent change in GAAP rent (1)
8.9 %8.6 %— — — 
Total TI & LC per square foot (2)
$74.56 $85.43 $42.92 $79.53 $23.12 
Total TI & LC per sq. ft. per year of lease term (2)
$11.50 $10.59 $7.81 $11.33 $3.85 
The above leasing summary is based on leases executed during the periods indicated and excludes leasing activity for assets during the quarter in which the asset was sold or classified as held for sale. Our same property leasing activity is identical to the information above for all periods presented. Refer to the definitions section of this document for a description of our same property portfolio.
(1)
Percent change in GAAP and cash rents is a comparison of current rent, including estimated tenant expense reimbursements, if any, to the rent, including actual/projected tenant expense reimbursements, if any, last received for the same space on a GAAP and cash basis, respectively. Cash rent during the reporting period is calculated before deducting any initial period free rent. Leasing in suites vacant longer than two years was excluded from the calculation.
(2)Includes tenant improvements (TI) and leasing commissions (LC).
(3)Starting cash rent for new leases signed during the three months ended September 30, 2022, was $43.45, as reported in this table and in our September 30, 2022 Supplemental Operating and Financial Information. In our December 31, 2022 Supplemental Operating and Financial Information, starting cash rent for new leases signed during the three months ended September 30, 2022, was incorrectly reported as $4.45.

13

CAPITAL SUMMARY
EXPENDITURES & SAME PROPERTY LEASING COMMITMENTS
(Unaudited, dollars and square feet in thousands)
CAPITAL SUMMARYThree Months Ended
EXPENDITURES3/31/202312/31/20229/30/20226/30/20223/31/2022
Tenant improvements$1,757 $822 $557 $1,447 $579 
Leasing costs
1,162 977 501 831 590 
Building improvements (1)
195 231 59 42 265 
Total capital expenditures$3,114 $2,030 $1,117 $2,320 $1,434 
Average square feet during period
1,507 1,507 1,507 1,507 1,507 
Building improvements per average total sq. ft. during period
$0.13 $0.15 $0.04 $0.03 $0.18 
CAPITAL SUMMARYThree Months Ended
SAME PROPERTY LEASING COMMITMENTSMarch 31, 2023
New LeasesRenewal LeasesTotal
Square feet leased during the period23 37 60 
Total TI & LC (2)
$1,715 $2,170 $3,885 
Total TI & LC per square foot (2)
$74.56 $58.65 $64.87 
Weighted average lease term by square foot (years)6.5 5.3 5.8 
Total TI & LC per square foot per year of lease term (2)
$11.50 $11.00 $11.22 
(1)Tenant-funded capital expenditures are excluded.
(2)Includes tenant improvements (TI) and leasing commissions (LC).

14

TENANTS REPRESENTING 2.5% OR MORE OF ANNUALIZED RENTAL REVENUE
As of March 31, 2023
(Unaudited, square feet in thousands)

Tenant
Square Feet (1)
% of Total Sq. Ft. (1)
% of Annualized Rental RevenueWeighted Average Remaining Lease Term
1 Equinor Energy Services, Inc.80 6.5 %6.0 %0.8
2 Salesforce.com, Inc.65 5.3 %5.5 %2.7
3 KPMG, LLP64 5.2 %5.0 %6.2
4 Crowdstrike, Inc.48 3.9 %3.7 %6.9
5 CBRE, Inc.40 3.3 %3.7 %5.0
6 RSM US LLP32 2.6 %3.4 %9.2
7 SonarSource US, Inc.28 2.3 %3.0 %4.4
8 Alden Torch Financial, LLC34 2.8 %2.8 %3.9
9 Wunderman Thompson, LLC24 2.0 %2.5 %4.3
10 Shiseido Americas Corporation21 1.7 %2.5 %6.6
Total436 35.6 %38.1 %4.5

(1)
Square footage as of March 31, 2023 includes space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants.

15

SAME PROPERTY LEASE EXPIRATION SCHEDULE
As of March 31, 2023
(Unaudited, dollars and sq. ft. in thousands)
YearNumber of Tenants Expiring
Leased Sq. Ft. Expiring (1)
% of Leased Sq. Ft. ExpiringCumulative % of Leased Sq. Ft. Expiring
Annualized Rental Revenue Expiring (2)
% of Annualized Rental Revenue ExpiringCumulative % of Annualized Rental Revenue Expiring
202312917.4 %7.4 %$4,200 7.4 %7.4 %
20241618515.0 %22.4 %8,205 14.5 %21.9 %
20251214611.9 %34.3 %7,008 12.5 %34.4 %
20269725.9 %40.2 %3,567 6.3 %40.7 %
20271622718.5 %58.7 %11,012 19.5 %60.2 %
20281112610.2 %68.9 %5,916 10.5 %70.7 %
2029713711.1 %80.0 %6,964 12.3 %83.0 %
2030714511.8 %91.8 %5,325 9.4 %92.4 %
20312221.8 %93.6 %607 1.1 %93.5 %
20321322.6 %96.2 %1,908 3.4 %96.9 %
Thereafter4473.8 %100.0 %1,730 3.1 %100.0 %
    Total971,230100.0 %$56,442 100.0 %
Weighted average remaining
    lease term (in years)4.3 4.2 
(1)
Leased square footage as of March 31, 2023 includes space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants. The year expiring corresponds to the latest-expiring signed lease for a given suite. Thus, backfilled suites expire in the year stipulated by the new lease.
(2)Excludes the Annualized Rental Revenue of space that is leased but not commenced.

16

COMMON & POTENTIAL COMMON SHARES
(Unaudited, share amounts in thousands)
Three Months Ended
March 31,
Weighted Average Share Calculation - GAAP EPS20232022
Weighted average common shares outstanding - basic (1)
109,720 113,740 
Weighted average dilutive RSUs and maket-based LTIP Units (2)
1,580 — 
Weighted average common shares outstanding - diluted (1)
111,300 113,740 
Three Months Ended
March 31,
Weighted Average Share and Unit Calculation - FFO and Normalized FFO per share and unit20232022
Weighted average EQC common shares outstanding (1)
109,720 113,740 
Weighted average Operating Partnership Units outstanding (3)
227 223 
Weighted average time-based LTIP Units (2)(3)
97 45 
Weighted average common shares and units outstanding - basic (1)
110,044 114,008 
Weighted average dilutive RSUs and market-based LTIP Units (2)
1,580 460 
Weighted average common shares and units outstanding - diluted (1)
111,624 114,468 
Rollforward of Share Count to March 31, 2023
Series D Preferred Shares (4)
EQC Common Shares (5)
Outstanding on December 31, 20224,915 109,428 
Share-based compensation grants and vesting, net (6)
— 274 
Outstanding on March 31, 2023
4,915 109,702 
Common shares issuable from RSUs, Operating Partnership Units, and LTIP Units as measured on March 31, 2023 (2)
2,068 
Potential common shares as measured on March 31, 2023 (7)
111,770 
(1)
Weighted average common shares outstanding for the three months ended March 31, 2023 and 2022 includes 113 and 162 unvested, earned RSUs, respectively.
(2)
We have granted RSUs and LTIP Units to certain trustees, employees and eligible consultants. RSUs and market-based LTIP Units contain service and market-based vesting components. Time-based LTIP Units contain service-based vesting components. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units.
(3)
Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic include time-based LTIP Units and OP Units that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only).
(4)
As of March 31, 2023, we had 4,915 series D preferred shares that were convertible into 4,032 common shares. The series D preferred shares are anti-dilutive for GAAP EPS for all periods presented. The series D preferred shares are anti-dilutive for all periods presented with respect to FFO and Normalized FFO per common share and unit.
(5)EQC common shares include unvested restricted shares.
(6)This amount is net of forfeitures and shares surrendered to satisfy statutory tax withholding obligations.
(7)
Potential common shares as measured on March 31, 2023 include unvested earned RSUs. The 4,915 series D preferred shares outstanding that were convertible into 4,032 common shares as of March 31, 2023 are excluded.
17

DEFINITIONS
Annualized Rental Revenue
Annualized Rental Revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2023, plus estimated recurring expense reimbursements; excludes lease value amortization, straight-line rent adjustments, abated (free) rent periods and parking revenue. We calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported, adding abated rent, and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues. The annualized rental revenue of disposed properties, if any, is presented for the quarter-ended preceding each disposition.
Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.
Building Improvements
Building improvements are expenditures to replace obsolete building components or extend the useful life of existing assets. Tenant-funded capital expenditures are excluded.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDAre and Adjusted EBITDAre
We calculate EBITDA as net income (loss) excluding interest expense, income tax expense and depreciation and amortization.
We calculate EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts (Nareit). Nareit defines EBITDAre as net income (loss), calculated in accordance with GAAP, plus interest expense, plus income tax expense, plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated joint ventures, plus adjustments to reflect the entity's share of EBITDAre of unconsolidated joint ventures. Our calculation of Adjusted EBITDAre differs from our calculations of EBITDA and EBITDAre because we exclude certain items that we view as nonrecurring or impacting comparability from period to period. EBITDA, EBITDAre and Adjusted EBITDAre are supplemental non-GAAP financial measures.
We consider EBITDA, EBITDAre and Adjusted EBITDAre to be appropriate measures of our operating performance, along with net income (loss), net income (loss) attributable to EQC common shareholders, and cash flow from operating activities. We believe that EBITDA, EBITDAre and Adjusted EBITDAre provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA, EBITDAre and Adjusted EBITDAre may facilitate a comparison of current operating performance with our past operating performance. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss), net income (loss) attributable to EQC common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate EBITDA, EBITDAre and Adjusted EBITDAre differently than we do.
Funds from Operations (FFO) and Normalized FFO
We compute FFO in accordance with standards established by Nareit. Nareit defines FFO as net income (loss), calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate and our portion of these items related to equity investees and noncontrolling interests.  Our calculation of Normalized FFO differs from Nareit’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period.  FFO and Normalized FFO are supplemental non-GAAP financial measures. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities.
We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs.  FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income (loss), net income (loss) attributable to EQC common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  These measures should be considered in conjunction with net income (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.
Leasing Costs
Leasing costs include leasing commissions (LCs) and related legal expenses.
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DEFINITIONS
LTIP Units
LTIP Units are a class of beneficial interests in EQC Operating Trust (the Operating Trust) that may be issued to employees, officers or trustees of the Operating Trust, EQC, or their subsidiaries.
Net Operating Income (NOI), Same Property NOI, Cash Basis NOI and Same Property Cash Basis NOI
NOI is income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses. Cash Basis NOI is NOI excluding the effects of straight-line rent adjustments, lease value amortization and lease termination fees. The quarter-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2022 through March 31, 2023. The year-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2022 through March 31, 2023. Properties classified as held for sale within our condensed consolidated balance sheets are excluded from the same property versions of these measures.
We consider these supplemental non-GAAP financial measures to be appropriate supplemental measures to net income (loss) because they may help to understand the operations of our properties. We use these measures internally to evaluate property level performance, and we believe that they provide useful information to investors regarding our results of operations because they reflect only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. Cash Basis NOI is among the factors considered with respect to acquisition, disposition and financing decisions. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income (loss), net income (loss) attributable to Equity Commonwealth common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate these measures differently than we do.
Net Book Value
Net book value represents the carrying value of real estate properties after depreciation and amortization, purchase price allocations and impairment write-downs, if any.
NOI Margin
NOI Margin is NOI (or the same property or cash basis derivations of NOI defined above) divided by the total revenues used to calculate NOI (or its derivation).
Operating Partnership Units
Operating Partnership Units are beneficial interests in the Operating Trust.
Other Revenue
Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
Percentage Commenced
Percentage commenced is the percentage of space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, which includes the space of tenants in a free rent period.
Percentage Leased
Percentage leased is the percentage of space subject to signed leases.
Rental Revenue
Rental revenue is primarily comprised of minimum lease payments from tenants, including tenant reimbursements. In addition, rental revenue includes lease termination fees and straight-line rent adjustments.
Same Properties
Our quarter-to-date same property portfolio is comprised of those properties continuously owned from January 1, 2022 through March 31, 2023. Our year-to-date same property portfolio is comprised of those properties continuously owned from January 1, 2022 through March 31, 2023. Properties classified as held for sale within our condensed consolidated balance sheets are excluded.
Tenant Improvements
Tenant improvements are capital expenditures to improve tenant spaces.

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DEFINITIONS
Total Market Capitalization
Total market capitalization is the market value of preferred shares plus the market value of diluted common shares. The market value of preferred shares is the product of the number of Series D preferred shares outstanding at the end of the period and the closing share price of the Series D preferred shares (EQCpD) at the end of the period. The market value of diluted common shares is the product of the number of diluted common shares outstanding at the end of the period and the closing share price of the common shares (EQC) at the end of the period.
Undepreciated Book Value
Undepreciated book value represents the carrying value of real estate properties after purchase price allocations, and impairment write-downs, if any.


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